Too much client concentration risk-ONGC2. Business with PSU generally increases late receivables. Trade receivables-in 2016 it is 56 cr vs 2015 it was 26 cr .Generally PSU does not follow Payment terms and conditions, Some times it may be forced to write off receivables too.

Capital Intensive business, low utilization of equipment leads to higher losses.
4.D/E is increasing(doubled in this year) which is uncomfortable.

Payment policies by PSUs and the govt is fast changing under the Modi govt and high capital intensity acts as a deterrent for other companies to enter this segment. The potential for gas dehydration as well as production from their fields is not yet factored into the price . As stated by them in the investor presentation one of their fields will go on stream in fy18 . I also expect them to bid and win a few more blocks when the marginal fields are put up for auction later this year.

Asset turnover have improving trend and so will be roe( assuming margins being where they are).
They were heavily investing for last 4-5 years and now the benefits will be seen in coming years.
Disc: invested

They have completed their capex for the present order book of 850 cr. They will need fresh capex only if they secure new orders. Infact they see a healthy pipeline of orders in the next two months or so. Only ongc has started gas dehydration and other PSUs will soon follow suite

These are my rough notes from concall.
Please add if any thing is missing.

Revenue breakup
Compression - 25cr
Rigs - 17cr
Dehydration - 22cr

Total debt - 310cr
Capex (current q) - 68cr
orderbook -845cr…to be executed in next 2-3 years. No capex required for current order book. Will do capex for new orders.
order breakup:
Compression - 30%
Rigs - 30%
Dehydration - 40%

order added (current q) - 35cr

capital allocation:
45cr allocated in E&P, rest in service ( no breakup among services).
Capital is allocated based on orders and not planned.

Amalgamation of subsidiaries to avoid double taxation , DDT.

Margin profile - 55-58% at company level. (not available at segment level).

Revenue geography = Domestic/Export : 100/0

Revenue from E&P can be expected from 2018-19. First lever will be CBM.

You have summarized the concall perfectly. They are in advanced talk with some cos for stake dilution in their CBM block which will get them approx 150 cr and this should happen in this year itself. I think the valuation of all their blocks put together will be far higher than their present market cap. Presently it is reflecting only their services business . I expect the stock to hit the 1000 Rs mark in the next 5-7years

Though the company is on growth trajectory there are many risks associated…
execution risk
high debt risk(As business is capital intensive)
high fixed cost risk( operating leverage is double edge sword )
etc…

Post the stupendous results deep Ind saw a correction in line with the markets. Now at the first signs of normalcy in the markets Deep has bounced back to levels above 200.

If the markets stay positive for a few more days deep would have easily crossed it’s 52 week high of Rs 215.70. Next in line will be it’s all time high of Rs 271 which also can be very well crossed in this financial year itself.

A few more order wins in the next few months and a repeat of its Stellar performance even in the next qtr results will convert a lot of naysayers.